[Congressional Record Volume 141, Number 41 (Monday, March 6, 1995)]
[Extensions of Remarks]
[Page E519]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

                             [[Page E519]]

     INTRODUCTION OF A BILL TO ROLL BACK THE HARBOR MAINTENANCE TAX

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                           HON. JIM McDERMOTT

                             of washington

                    in the house of representatives

                          Monday, March 6, 1995
  Mr. McDERMOTT. Mr. Speaker, today I am introducing a bill to roll 
back the Harbor Maintenance Tax [HMT] and provide truth in budgeting. 
The HMT raises much more money than is needed for harbor maintenance 
and the Harbor Maintenance Trust Fund contains a huge surplus which is 
hurting our ports and being used to reduce the size of the Federal 
deficit. The current high tax rate raises the cost of U.S. exports and 
encourages shippers to divert cargo to Canadian ports where no such tax 
is collected. The HMT rate should be rolled back or reduced so that it 
raises only 100 percent of the costs of harbor maintenance.
  The Water Resources Development Act of 1986 established a HMT of 0.04 
percent of cargo value to pay for 40 percent of the harbor maintenance 
activities of the Army Corps of Engineers. In 1990, the Bush 
administration proposed raising the tax rate to 0.125 percent of cargo 
value to pay for 100 percent of harbor maintenance work, 0.115 percent, 
and certain extraneous activities, 0.01 percent, of the National 
Oceanic and Atmospheric Administration [NOAA]. The 1990 budget 
agreement approved the full tax rate increase but rejected the 
diversion of the trust funds to NOAA.
  Harbor Maintenance Trust Fund revenues have increased much faster 
than expenditures as a result of increased trade, stricter enforcement 
of the tax, fairly constant Corps harbor maintenance appropriations and 
the artificially high HMT rate. The surplus in the trust fund grew from 
$120.6 million at the end of fiscal year 1992 to $302.3 million at the 
end of fiscal year 1993 to $451.4 million at the end of fiscal year 
1994. The administration projects that the trust fund surplus will grow 
to $644.3 million by the end of fiscal year 1995 and $802.9 million by 
the end of fiscal year 1996.
  In fiscal year 1994, the Harbor Maintenance Trust Fund distributed 
$497.1 million for harbor maintenance activities by the Army Corps of 
Engineers, but collected $646.2 million, or 130 percent of 
expenditures. With the additional funds for enforcement of the HMT 
included in the implementing legislation for GATT, the trust fund 
surplus may grow even faster in the coming years.
  This growing surplus is especially disturbing because of the way the 
HMT harms the competitiveness of U.S. exports in the international 
marketplace and diverts cargo to Canadian, and potentially Mexican, 
ports where no such tax is collected. For example, on all import 
containers coming into the Port of Seattle, the HMT adds an average 
cost of $180 per box. This is money that the importer could save by 
simply diverting the cargo to Vancouver, Canada.
  The HMT is especially burdensome to U.S. ports in the Pacific 
Northwest, Great Lakes region and the Northeast which compete directly 
with nearby Canadian ports. The burden is even greater for northern 
ports like Seattle, Tacoma, and Boston that need very little harbor 
maintenance. The Ports of Seattle and Tacoma estimate that their 
shippers annually pay over $50 million in harbor maintenance taxes 
while the ports receive less than $1 million annually in harbor 
maintenance--this amounts to less than 2 cents back on the dollar.
  The growing trust fund surplus may also violate article II of the 
GATT which only permits ``fees or other charges,'' on trade which are 
``commensurate with the cost of services rendered.'' Several European 
nations have expressed concern to the U.S. Government about this 
possible GATT violation.
  My legislation would rollback the HMT as follows:
  First, reduce the harbor maintenance tax rate by 0.02 percentage 
points in three successive years to 0.65 percent of cargo value; and
  Second, provide that in any year thereafter that begins with a Harbor 
Maintenance Trust Fund balance of under $100 million, the HMT rate will 
be increased by 0.01 percentage point, and that, in any year that 
begins with a trust Fund balance of over $100 million, the tax rate 
will be decreased by 0.01 percentage point.
  This method will ensure that the Harbor Maintenance Trust Fund will 
always have a positive, but medium-sized, balance. The trigger 
provision would probably not come into play for 6-8 years. The 
Hazardous Substance Superfund and the Oil Spill Liability Trust Funds 
operate with similar triggers.
  A rollback of the Harbor Maintenance Tax is supported by many 
shippers, carriers, and ports involved in international trade. This 
legislation would be a modest step to control the growing surplus in 
the Harbor Maintenance Trust Fund and check the deleterious effects of 
the Harbor Maintenance Tax.


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